Expenditure needs

The project “Standard expenditure needs” started with Legislative Decree No. 216 of November 26, 2010 that entrusted SOSE - Soluzioni per il Sistema Economico S.p.A. with the development of methodologies aimed to define standard expenditure needs.

Standard expenditure needs represent local authorities’ financial needs in relation to their territorial features and the sociodemographic characteristics of resident population.

The use of standard expenditure needs to allocate equalization grants allows to overcome the old criterion of the historical expenditure for resource allocation.

Today, this methodological approach is considered a best practice in designing financing systems for local authorities and offers an important chance to the Country to upgrade intergovernmental relationships and make the public expenditure of local governments more efficient.

Municipalities standard needs

During 2021, SOSE renewed the methodology for determining the standard needs for the Nursery Service, which includes early childhood benefits for children aged 0-2 years. For the Crèches service, the approved methodological review made it possible to determine the standard needs of each municipality through the recognition of the users served, assessed on the basis of the standard cost of each municipality and the possible recognition of a number of users necessary to reach the minimum level (assessed on the basis of a minimum standard cost of service identified in the standard cost for contributions and/or vouchers).

In 2020, SOSE revised the methodologies to determine standard expenditure needs in the functions of Social Care, Planning and public roads, and Waste disposal. The methodological evolution met local governments’ different needs to grasp the local realities more precisely.

Regarding the Social care sector, the new methodology considers the provincial dimension as most suitable for capturing the elements that differentiate the expenditure levels.

As requested by local authorities over time, the new methodological approach changed the weight of the variable linked to the population in determining the standard expenditure needs for the  Function Planning and public roads.

The updated methodology do not consider the Waste Disposal Service in the calculation of standard expenditure needs.

The Wider Area Authorities standard needs 

During 2021 SOSE renewed the methodology used to determine the standard needs for the Wider Area Authorities of the Ordinary Statute Regions taking into account the provisions introduced by Law n. 56 of 2014 (L. 56/2014) regarding the new institutional structure of the provinces and metropolitan cities and the scope of the fundamental functions that these authorities are required to perform. The approved methodological revision made it possible to determine the standard needs of each authority in monetary value.